The seventh annual Low Carbon Economy Index models major economies’ carbon intensity - the measure of energy related greenhouse gas emissions per million dollars of GDP. It shows global carbon intensity has fallen by 2.7% in 2014, the steepest decline in seven years of the PwC analysis. Global growth of 3.2% in 2014 was achieved with only 0.5% growth in energy related emissions. Breaking the link between emissions and economic growth – or ‘uncoupling’ – is essential to avoid the worst impacts of climate change. Despite progress by some countries, globally, the target level of reductions in greenhouse gas emissions per unit of GDP has been missed for the seventh successive year. Rapid and sustained decarbonisation of around 6.3% is needed every year globally in order to limit global average temperature rise to 2°C.
The United Nation’s 21st Conference of the Parties (COP 21) is the culmination of four years of talks and should be a historic and durable deal. This deal should also help to achieve the Sustainable Development Goals which governments agreed to at the UN summit in September 2015. In many respects, the COP21 summit will just signal the start of a global long term economic and energy transition.
Jayne Mammatt, Sustainability and Climate Change Director, PwC South Africa,
comments: “It is expected to have far reaching implications for the business community, affecting energy, transport, ICT, heavy industry, agriculture and finance, with a step change in investment, regulation and markets.”
PwC’s analysis highlights the following regarding South Africa’s current and intended contribution to global decarbonisation:
Mammatt continues: “The range of 398 and 614 MtCO2e by 2025-2030 is a wide one, so its implied decarbonisation rate could be anything between 3.3% to 5.9% a year. This could bring some uncertainty to businesses in South Africa expecting carbon regulations, as the room for manoeuvre is significant.
“Notwithstanding the uncertainty, the more ambitious target of 398 MtCO2 would mean a decarbonisation rate close to the global rate required of 6.3%, making South Africa’s INDC an ambitious one, but even at 3.3% it will be decarbonising marginally faster than the average of the INDC targets we have examined.”
Many countries have put regulation of coal front and centre of their plans and are setting targets for renewables and low emissions vehicles. This is true for South Africa – of particular note being the move towards a national carbon tax. The Draft Carbon Tax Bill was released for comment in November 2015. The aim is to introduce the carbon tax in a phased manner, with the first phase running from the commencement of the regime until 2020. The tax forms a part of South Africa’s national response and will have implications for business, alongside mandatory carbon emissions reporting, company level carbon budgets and up-scaled national adaptation and mitigation programmes. This situation also presents a number of possible opportunities, including:
The business community has already begun to respond to the global climate change priority, as evident in the South Africa Carbon Disclosure Project results examined over the last 8 years. However, more will be expected going forwards, as the global goals are significant.
Jayne Mammatt concludes: “Despite being a step change, the Paris targets fall short of the 2°C goal, so the Paris agreement will need a process to review national progress and to raise ambition in future. Companies need policies and regulations that are business friendly and based on market mechanisms. Such policies will help them to scale up clean energy and energy efficiency, encourage conservation of natural resources, and provide the right incentives to drive investment in low carbon technologies – to build resilience into communities most affected by climate impacts.”